This is like what we see in some Chinese drama.
In my defense, I would say that it is like putting together a jigsaw puzzle.
Wilmar is still growing its businesses.
Have a more secure financial future in an uncertain world by creating a stream of reliable passive income with high yields.
Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
This is like what we see in some Chinese drama.
Posted by AK71 at 12:58 PM 24 comments
Labels:
Wilmar
2023 started out well for my investment portfolio with Volare Group offering to buy units in one of my largest investments, Sabana REIT, for 46.5c a unit in January.
As my investment in Sabana REIT is made up mostly of units bought in December 2020 and January 2021 at around 35c a unit, the offer was good news to me.
I last blogged about this just a few days ago:
Sabana REIT: Sell at 46.5c a unit to Volare Group?
Then, earlier this month in February, DBS announced stellar results and higher dividend.
A special dividend of 50c a share was also declared and because DBS is one of my largest investments, larger, in fact, than my investment in Sabana REIT by a good measure, it was fantastic news to me.
It will have a relatively significant impact on my quarterly passive income.
That led me to wonder if OCBC and UOB might do the same as their results are expected to be relatively robust too.
See:
OCBC and UOB to follow DBS with special dividends?
Still luxuriating in the news of a rather generous special dividend from DBS, I read that Wilmar International has declared a final DPS or dividend per share of 11c.
Together with the 6c interim dividend paid earlier, total dividend is 17c per share which is a record for Wilmar International!
As one of my largest investments, Wilmar International is in the same bracket as DBS and UOB in my investment portfolio.
See:
Largest investments updated (4Q 2022.)
Good news all around!
Although I am telling myself don't let it go to my head, I am feeling a little giddy, to be quite honest.
I have to be careful because I tend to make mistakes when I am feeling high.
I know this for a fact because it has happened a few times before.
Making mistakes when I am on medication is unfortunate but making mistake when I am feeling high is shameful.
I already gave myself a little treat when DBS announced its special dividend.
I think it is OK to give myself another little treat.
Must be nicer to myself.
Wilmar International and our local lenders are all cyclical businesses and the weather isn't always going to be sunny.
I am not being a wet blanket.
It is just the hard truth.
So, socking away a big chunk of the bumper dividends in preparation for rainy days is the sensible thing to do.
I alluded to this when I shared my 2022 full year passive income at the beginning of this year.
This is not being pessimistic.
It is just being pragmatic.
See:
Passive income: More resilience.
Still, rain or shine, I expect Wilmar International and our local lenders to continue to bring home the bacon for many more years to come.
I also remind myself that I have not always been right and that I have been wrong too.
I have also said many times that as long as I am right more often than I am wrong, I should do well enough.
Peter Lynch famously said that if we can be right 6 times out of 10 when investing our money, we are not doing too badly.
However, I should also say that unlike Warren Buffett who has money pouring in constantly so that he can invest and compensate for mistakes, we don't have that luxury.
So, by socking away cash whenever we get a boost in passive income allows us to do a mini mimicry of Warren Buffett's cashflow which will allow us to compensate for mistakes more easily.
Of course, if you are someone who is able to mimic Warren Buffett's cashflow without having to do what I do, then, good on you!
If you are a new reader or cannot remember, I blogged about this in 2014:
How to make recovering from investment losses easier?
Moving on to VICOM which reported higher earnings and declared a final DPS of 3.32c, long time regular readers know that this is one of my larger smaller investments.
This means that the position is larger than $50,000 but smaller than $100,000 in market value.
Unlike its parent, ComfortDelgro, the price of VICOM's common stock is very much above my buy price since I added it to my investment portfolio in 2015.
I would say that VICOM is similar to ST Engineering, another one of my larger smaller investments, in the way that a big portion of its income is assured because of our government.
Just like ST Engineering, VICOM also pays out 90% of its earnings as dividends.
Not an exciting investment but a steady one for income, I expect it to continue paying for my car inspections (and more, of course.)
VICOM steady pom pi pi!
Very apt Singlish phrase if we were to imagine cars honking.
I think I have rambled long enough in this blog.
To all fellow Wilmar International, DBS and VICOM shareholders, congratulations and huat ah!
References:
1. Accumulating Wilmar.
2. Wilmar: Free stuff...
Posted by AK71 at 9:11 AM 11 comments
Labels:
investment,
VICOM,
Wilmar
I increased my investment in Wilmar, averaging up in the process, as it seems to fall out of favor with Mr. Market once again.
The last time I increased my investment in Wilmar was in August last year at a similar price level.
Back then, I said I was pretty happy to add to my investment at a price much lower than what Mr. Kuok paid in June in the same year.
Now, I feel the same way, especially when Wilmar has been doing share buybacks constantly even at much higher prices.
Wilmar has been undervalued for a long time and it is still deeply undervalued today.
The case for investing in Wilmar is even more compelling today especially if we believe that heightened inflation is here to stay for a longer time.
If we believe that there is going to be stagflation, then, companies like Wilmar will likely be the ones which do better as they provide essential goods and services.
If you are interested in my little ideas on Wilmar, I will provide links to my past blogs on Wilmar at the end of this blog because I am too lazy to rehash.
However, here are a couple points which I might or might not have mentioned before, off the top of my head:
1. Wilmar's subsidiary in China, Yihai Kerry Arawana Holdings (YKA) in China has a market cap that is about three times that of Wilmar's market cap in Singapore and Wilmar still holds a 90% stake in YKA.
2. Wilmar's 50% joint venture in India, Adani Wilmar Limited, has achieved similar success in its public listing as its market valuation has tripled since listing in February this year.
Wilmar is a profitable business and is reliable when it comes to paying dividends.
Wilmar paid meaningful dividends even during the COVID-19 pandemic bear market.
Wilmar can easily unlock value for shareholders by reducing its stakes in the abovementioned businesses alone.
Undervalued can remain undervalued for a long time, of course, which makes Wilmar a decent choice for investors who are pretty happy to be paid while waiting.
Investing in Wilmar today or at even lower prices, if we are lucky, is to get big chunks of good income producing businesses for free.
Whether it be stocks or socks, we like buying when they are marked down but what about having some pretty cool stuff thrown in for free with our purchase?
AK is being mental again. (TmT)
Recently published:
1. Centurion Corp.
2. Chinese tech stocks.
Related posts:
1. Wilmar's interim dividend.
2. Wilmar was $7.11 a share.
3. Wilmar: Target reacquired.
4. Accumulating Wilmar on price weakness.
Posted by AK71 at 11:38 AM 14 comments
Labels:
investment,
Wilmar
Interest rate is rising.
PM Lee recently warned of a possible recession in the quarters ahead.
Put rising interest rate and a slowing economy together, we get a rather gloomy picture.
The evil which is inflation is preferred to the evil which is deflation.
Although inflation is the lesser evil, it isn't as benign when it is heightened which is what we are seeing now in the world.
We can reduce inflationary pressure either by increasing supply of goods and services which are in demand or tempering demand for such goods and services.
As it is difficult to increase supply right away, central banks are trying to tame inflation by increasing interest rate in an effort to reduce demand.
Increasing interest rate increases the cost of debt.
Credit is the lifeblood of commerce and most businesses are leveraged to some degree.
If the economy is healthy, businesses can pass on the higher cost of doing business to their customers and higher finance expense that comes from higher interest rates are naturally a part of such cost.
However, it becomes more difficult for many businesses to pass on such higher costs to customers if the economy is suffering from malaise.
Heightened inflation, rapidly increasing interest rates and low economic growth is not a good mix.
In such a situation, even very strong companies will not be spared a slowdown as most entities would be less ready to part with their money.
Already, we see some big name MNCs both in the old and new economies warning of very difficult quarters ahead.
Only the fittest will survive but even they might not emerge unscathed from such a toxic cocktail.
As an investor for income, I believe that businesses which are able and willing to pay a meaningful dividend should be favored.
To make sure that dividends are sustainable, these businesses should also provide necessary goods and services and have stronger balance sheets.
They too will take a few punches during hard times but they should be able to roll with the punches.
I think staying invested is still the way to go but, like I said, I should mostly be invested in businesses which are able and willing to pay dividends even during hard times.
So, with this in mind, I have taken a hard look at my largest investments since they impact the performance of my portfolio the most.
The strategy to increase my investments in DBS, OCBC and UOB during the COVID-19 induced bear market has turned out well and sticking with this strategy makes sense to me especially with interest rate rising.
I am also interested in increasing my investments in ComfortDelgro and CLCT on weakness as they seemed to have lagged in price recovery while their businesses look more attractive to me in recent times but for different reasons.
I am leaning more towards ComfortDelgro which has a stronger balance sheet and also because looking at the numbers which have improved, there is a fairly good chance that future dividends will be higher and could even go back to pre-pandemic levels.
CLCT's plan is to increase the proportion of new economy assets in their portfolio and I foresee more fund raising in the future.
So, I will increase my investment in CLCT slowly and not bulk up in a hurry.
REITs are required to pay out at least 90% of their operating cash flow to investors to enjoy tax benefits and this is a source of comfort to me.
The REITs in my portfolio are rather conservative when it comes to debt and in the case of IREIT Global, some of their rental income is linked to the German consumer price index and higher inflation could see a greater increase in income.
In my list of largest investments, the only entity which did not pay a dividend during the last bear market was Centurion Corporation.
Amongst my largest investments, Centurion Corporation also has the weakest balance sheet apart from Wilmar International.
However, Wilmar International is in the business of food production and distribution which, in my opinion, is recession proof.
Given their size and market dominance, they should be able to charge higher prices.
Wilmar also has good options available to unlock value for shareholders and they were paying dividends even during the pandemic.
I increased my investment in Centurion Corporation as Singapore decided to live with COVID-19.
For those who are interested in my thoughts on the matter, read:
In an environment of rapidly increasing interest rate and slowing economy, however, with a rather weak balance sheet, it could be harder for Centurion Corporation to bring home the bacon.
In my original blog on why I invested in Centurion Corporation, I crunched some numbers on how rising interest rate could impact Centurion Corporation's interest cover ratio.
For those who are interested, read:
Added Centurion Corp to portfolio.
Of course, if they are able to increase asking price per bed meaningfully to balance the increase in the cost of debt, then, they should be OK.
Although they would be able to do so easily in a healthy economy, it might not be so easy during times of economic malaise.
Wait, didn't Centurion Corporation do quite well even when the economy was unhealthy?
Yes, they did but they didn't have to deal with rapidly increasing interest rates.
I don't know everything and I might be missing a few things here.
So, I have decided to only reduce my exposure to Centurion Corporation and not go to zero.
As my total passive income held up quite well during the two years when Centurion Corporation suspended dividend payouts, I doubt reducing my investment would have any meaningful impact in terms of passive income generation which makes this decision an easier one for me.
Although Centurion Corporation still looks undervalued to me as it trades at a huge discount to NAV, to be honest, this discount could reduce as valuation of their assets could take a hit.
It would be interesting to see how the management navigates the challenges ahead and how they might unlock value for shareholders.
They are trying to sell some assets in the USA now which if successful should help in reducing leverage and unlocking value.
To this end, I believe they should ramp up their effort and sell more assets.
Like Phua Chu Kang said at the onset of the COVID-19 pandemic, "Things different already."
In the grand scheme of things, this is a relatively minor shift of resources but because I am more inactive than active as an investor for income, it might seem like a big event.
Remember, mentally unstable AK is just talking to himself, as usual.
Recently published:
Avoid this in a rising interest rate environment.
Related posts:
1. Rising interest rate flashback...
2. Largest investments 1Q 2022.
3. Investing with peace of mind.
Posted by AK71 at 10:10 AM 29 comments
Labels:
Centurion,
ComfortDelgro,
CRCT,
DBS,
debt,
economics,
inflation,
investment,
OCBC,
REITs,
UOB,
Wilmar
A few years ago, I blogged about lessons from my journey as an investor with Sabana REIT.
Posted by AK71 at 11:18 PM 28 comments
Labels:
investment,
Sabana REIT,
Wilmar
This blog is in response to questions by readers, csky and linus.
On Wilmar, DBS, OCBC and UOB:
That price target of $5 for Wilmar which I suggested in November 2019 is outdated as Wilmar's chart pattern was damaged by the price action inflicted by the COVID-19 pandemic.
The chart has morphed since then.
For readers who don't know what we are talking about, see:
Wilmar's chart is showing very strong upward momentum right now.
RSI, a momentum oscillator, shows that Wilmar is overbought right now but it could stay overbought for some time.
This is because there isn't any negative divergence in the MACD which is another momentum oscillator.
As the stock price moves higher, the MACD moves higher and this positive momentum suggests price could go higher.
Compared to this, the charts of the three local banks show negative divergence.
Their higher highs in stock prices have been accompanied by lower highs in the MACD.
Softness in the local banks' stock prices is to be expected.
We could see them retreating to test immediate supports.
However, Wilmar's stock price looks like it could go higher.
How much higher?
I don't really do this anymore but I will stick my neck out this time.
You probably remember this blog from 2017:
Accumulating Wilmar on price weakness.
In that blog post, I noted that when Mr. Market was feeling very bullish about Wilmar's prospects (like now), Wilmar's stock traded at a huge premium to its NAV.
It was a really huge premium.
Today, Wilmar's NAV is significantly higher than it was in 2010.
Based on this observation, it is probably not irrational to think that Wilmar's stock price could go higher than $7.11 we saw so many years ago in January 2010.
Having said this, there is nothing wrong with taking profit.
So, selling some to lock in some gains is probably not a bad idea.
Trading around a core position?
Sounds familiar.
Buy more, sell some or hold?
You decide.
I anyhow talking to myself only hor.
Posted by AK71 at 5:48 PM 14 comments
Regular readers know that I have been a Wilmar shareholder for many years.
It is difficult not to find Wilmar impressive as a business entity with its breadth and depth of activities.
Many years of Mr. Market's pessimism towards Wilmar gave believers a big window of opportunity to build their exposure.
In the last two years or more, I have been accumulating shares of Wilmar until 3Q 2018 when I decided to sell into the rally, reducing my investment significantly while keeping a core position.
See:
Largest investments (3Q 2019).
It is a strategy that regular readers should be familiar with.
It is so that I would still stand to gain in case the bull had legs.
Some might call it a hedge as, always, I don't know everything.
Well, as it turned out, the bull grew tired and needed a break.
If you are new to my blog or if you are rather forgetful, to understand why I was building a relatively significant long position in Wilmar,
See:
Accumulating Wilmar on price weakness.
You will see how I did temporal comparative analysis in that August 2017 blog.
To understand why did I buy more when Wilmar's share price went under $3.00 a share instead of cutting losses,
See:
3Q 2018 passive income: Wilmar.
Conviction.
Good reasons make it stronger.
Of course, being paid while I waited made patience more affordable.
I watched the latest Terminator movie recently and Arnold Schwarzenegger (aka Carl) in one scene said:
"Target reacquired."
A man of few words, as always.
OK, no spoilers in case you have not watched the movie.
Anyway, Wilmar was still an investment target for me after the partial divestment exercise to lock in gains earlier this year.
Using my limited knowledge of technical analysis (TA), I waited for what I thought could be the right time to increase exposure again.
Over time, as its share price retreated, I thought Wilmar's chart could form either a falling wedge or a cup and handle pattern.
If it was a cup and handle pattern, share price should find a floor at approximately $3.50 a share (i.e. the lowest point of the handle).
Could be a few cents lower or higher.
I was also keeping an eye on the rising 200 days moving average (200dMA).
Being a long term moving average and a rising one at that, it should provide a stronger support.
By the time I decided to increase exposure again in a big way, the 200dMA was at $3.54 or so which tied in nicely with the approximate low (of the handle) in a probable cup and handle pattern.
I started buying at $3.60 and bought more as it did eventually hit $3.54.
Wilmar became one of the largest investments in my portfolio once more after that.
If you do not remember reading about this in my blog, you might want to see related post #1 at the end of this blog.
As usual, I scribbled all my TA on a scrap of paper and, unfortunately, I cannot find that paper scrap now.
However, I remember the measurements I took from charting.
Measurements?
Yes, the measured target prices.
Prices?
Yes, that is not a typo.
In the plural.
If Wilmar's share price were to move higher after forming a falling wedge, the measured upside target would approximate $4.50 a share.
If Wilmar's share price were to move higher after forming a cup and handle pattern, the measured upside target would approximate $5.00 a share.
Take my TA with a pinch of salt because I am an amateur, after all.
I know some of you do not believe me but I am just being honest.
Well, amateur or not, if things pan out like I think they might, I would stand to book a pretty handsome capital gain.
If things don't pan out like I think they might, all else remaining equal, I would still stay invested as I am comfortable with my level of exposure in a business that provides me with both elements of income and growth.
Now, who says we cannot be an investor and a trader at the same time?
Older readers would remember this masterpiece of a pyramid drawing by AK the artist:
Posted by AK71 at 1:48 PM 9 comments
Labels:
investment,
TA,
Wilmar
From my last couple of blogs, readers would be able to get an idea of what might have changed in my portfolio.
Since the last blog, however, I have made another significant investment or, more accurately, reinvestment.
What am I talking about?
Clue:
Posted by AK71 at 5:01 PM 34 comments
Labels:
Accordia Golf Trust,
AIMS-AMP Capital Industrial REIT,
Ascendas Hospitality Trust,
Centurion,
ComfortDelgro,
CPF,
DBS,
investment,
IREIT,
OCBC,
passive income,
Wilmar
It has been almost a year since my last blog on the largest investments in my portfolio.
Since then, in the following months, I added to some of my investments such as
1. OCBC at under $11.00 a share,
2. ComfortDelgro at under $2.20 a share
and
3. SingTel at under $3.00 a share.
Not much activity on my part, really.
Most of the time, I was just collecting dividends while waiting for Mr. Market to recover from his depression.
When Mr. Market did recover, I waited to see how euphoric he could get.
(To be totally honest, mostly, I was adventuring in Neverwinter but you know that, of course.)
After my recent blog on selling into the rally while staying invested, a reader asked if I could do an update on my largest investments.
I suppose I could.
$500,000 or more:
CPF.
Do I hear laughter?
While the CPF is not an equity and isn't a bond in the purest form, I do consider it an essential part of my portfolio.
I consider it essential as it is the risk free and volatility free component of my investment portfolio which pays a relatively attractive coupon.
I decided to include my CPF savings to remind readers that I am able to take a bit of risk in the way I invest because my CPF savings is a very significant safety net.
Well, for me, it is very significant.
When we invest, remember, we have to take into consideration our personal financial circumstances and not simply ride on other's coattails.
I hope that you had a good laugh.
More importantly, I hope you are also aware that this isn't all a joke.
From $350,000 to $499,999:
AIMS APAC REIT
(formerly
AIMS AMP Cap. Ind. REIT)
This should not come as a surprise, of course.
My investment in this REIT is already free of cost and there is no compelling reason for me to fiddle with something that has worked so well for so many years.
There has been talk of a takeover of this REIT and, to be honest, I hope it never happens.
Many good income producing investments in my portfolio have been taken away from me and it is difficult to find equivalent replacements.
From $200,000 to $349,999:
ComfortDelgro
Centurion Corporation Ltd.
From being unloved, ComfortDelgro has become much desired by Mr. Market.
I like ComfortDelgro too.
Even after trimming my investment in this rally by more than 20%, ComfortDegro still stays in the same bracket because the market value of my investment has gone up by more than 30%.
As an investment for income, ComfortDelgro is probably more reliable than Wilmar and its dividend is probably more sustainable than SingTel's.
Having said this, if Mr. Market should have a feverish desire to pay a much higher price for ComfortDelgro, everything else remaining equal, I would probably accept the offer.
Centurion Corporation Ltd. moved into the same bracket as ComfortDelgro because I added to my investment as its share price languished at about 40c a share.
Centurion Corporation Ltd. is undervalued and there continues to be persistent insider buying.
Peter Lynch said that there are many reasons why insiders sell but there is only one reason why they buy.
I like being paid while I wait and a dividend yield of almost 5% is not too shabby.
From $100,000 to $199,000:
Ascendas H-Trust
Accordia Golf Trust
Development Bank of Singapore
OCBC Bank
Ascendas H-Trust will probably be replaced by a new entity and I shared my view about the proposed combination with Ascott Residence Trust in two separate blog posts earlier this month.
As for Accordia Golf Trust, it still has the potential to increase DPU significantly in the next few years and I blogged about this before.
I am quite happy to be paid while I wait, as usual.
Development Bank of Singapore is doing well and I would like to build a larger position if there is a meaningful correction in its share price.
New addition to the list is OCBC Bank.
This is the result of several rounds of accumulation at under $11.00 a share as I felt it offered relatively good value for money.
As for SingTel and Wilmar, after reducing my exposure significantly, my positions in SingTel and Wilmar are now worth less than $100,000 each.
Not part of my largest investments now, SingTel and Wilmar have been removed from the list here.
If Mr. Market should tempt me with better offers, I am likely to give in to temptation and sell what remains.
Remember, I am just doing what makes sense to me.
Remember, you have to do what makes sense to you.
Have a plan, your own plan.
Posted by AK71 at 5:02 PM 40 comments
Labels:
Accordia Golf Trust,
AIMS-AMP Capital Industrial REIT,
Ascendas Hospitality Trust,
Ascott Residence Trust,
Centurion,
ComfortDelgro,
CPF,
DBS,
investment,
OCBC,
passive income,
Singtel,
Wilmar